Going interest only on mortgage for a number of years

D

Dan Murray

Guest
Say someone is on a tracker and wants to go interest only whilst his children are at uni:
- are the banks accommodating of such a request?;
- how long would the "interest only" period be typically permitted?
 
If a mortgage is for say 20 years and you go Interest Only for 8 years.

You then need to repay the Loan in 12 annual instalments rather than 20 annual instalments.

Dunno if they are still doing it.............. :)
 
Hi Dan

I don't think so, but you can always ask.

If someone is unable to pay their mortgage, they can apply to enter the Mortgage Arrears Resolution Process.

The lender may offer you a restructuring, but they are not obliged to do so.

And whether or not you get a restructuring, your ICB credit record would be damaged.

Which lender are you with?

Brendan
 
Unlikely I would say. Even back in the day you might get a rolling 6 month interest situation but it would be reviewed each time and there would want to be a very good reason, maternity leave being one example. Very unlikely to get a long term of it upfront on an existing mortgage, I always advised people look for 6 months and you'll probably get 3 but could be extended then on the review.

It got a lot more difficult then when times got tough and unless you had a serious financial problem such as redundancy/illness/drop in wages which brought you into the MARP process it was very rare to get a switch to interest only for any other reason.

But you never know so worth asking your bank anyway but you certainly won't get years of it upfront, try looking for a year first and see what happens. You also of course have the disadvantage already pointed out that the remaining term to pay the outstanding capital is shorter so repayments will rise for remaining term.
 
Monbretia said:
You also of course have the disadvantage already pointed out that the remaining term to pay the outstanding capital is shorter so repayments will rise for remaining term.
Click to expand...

If they do agree to reschedule your mortgage, I wouldn't worry about this.

Effectively, the lender is giving you a loan to fund your children's education at tracker rates. That will be a lot cheaper than any loan you would get elsewhere.

When your kids are educated and out of the house, you may well be able to afford to meet the increased repayments more easily.

Brendan
 
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